Companies with bearer shares my be excluded from public procurement

As of today, July 27th, 2020, bearer shareholders who do not issue declarations of beneficial owners will be able to be excluded from public tenders. The deadline for submitting all bearer shares will expire in January 2021.   

Although existing in Romanian legislation since the first form of Law no. 31/1990, published in November 1990, bearer shares have been publicized especially in the last 3-4 years.

The bearer shares confer the quality of associate of a company to any person who holds the documents that materializes the action in question, being able to be transfer them from one shareholder to another, by simply handing over the document. The name of the holder is not written on these shares. A comparison can be made with the banknotes, which can be transferred from one person to another by simply handing them over, without the name of the holder being written on them.

According to a new law published on Friday, July 24th, 2020 wich will enter into force today, July 27th, 2020, companies that have issued bearer shares my be required to issue a statement on their own responsibility by the real representative, by indicating the actual holders/beneficiaries of the bearer shares, meaning the identification data of the persons who actually hold these bearer shares.

The contracting authority has the obligation to exclude from the award procedure a participant who has issued bearer shares and does not issue the declaration on the actual beneficiaries.

According to the initiators of the law, at the level of 2017-2018, there were in Romania a number of approximately 360 companies that issued bearer shares, and these companies were awarded public procurement contracts “at the level of tens of billions of euros”.

We remind you that starting with July 2019, the issuing of new bearer shares was prohibited. By the same law that came into force about a year ago, the holders of bearer shares are obliged to file bearer shares at the headquarters of the issuing company under the sanction of their cancellation. The term for fulfiling this obligation is a maximum of 18 months calculated from July 2019, a term that will expire in January 2021.